🌍 The Warren Buffett Portfolio Audiobook; John Maynard Keynes' investing strategy; Howard Marks + More
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The Warren Buffett Portfolio Audiobook
The Warren Buffett Portfolio by Robert Hagstrom is one of my favorite investing books of all time. The YouTube algorithm just served me the audiobook. Listen below:
Related Content from CMQ:
📝 Read my notes about the book here.
📚 Buy the book on Amazon.
📺 Watch my five favorite Charlie Munger videos here.
Do You Know John Maynard Keynes?
The originator of the focus investment strategy is John Maynard Keynes. This is what Warren Buffett wrote about Keynes in the 1991 letter to Berkshire shareholders:
💬 “John Maynard Keynes, whose brilliance as a practicing investor matched his brilliance in thought, wrote a letter to a business associate, F. C. Scott, on August 15, 1934 that says it all:
As time goes on, I get more and more convinced that the right method in investment is to put fairly large sums into enterprises which one thinks one knows something about and in the management of which one thoroughly believes. It is a mistake to think that one limits one's risk by spreading too much between enterprises about which one knows little and has no reason for special confidence…One's knowledge and experience are definitely limited and there are seldom more than two or three enterprises at any given time in which I personally feel myself entitled to put full confidence."
🔗 Making Connections: Yesterday, we told you about the relationship between active trading and overconfidence. The Keynes approach is the antithesis of active, but how do you make sure you’re not being overconfident when you put huge sums in two or three stocks?
Howard Marks offered an explanation in a memo circa 2006:
So what’s up with Warren Buffett and Charlie Munger? They regularly amass stock positions for which there are no other buyers. And in fact, they seem to be more comfortable owning whole companies than public stocks they could sell off. Yet their record continues to be highly superior.
👉 Remember This: This next part is key.
The answer lies in the fact that they know what they’re doing. They’re able to tell good companies from bad ones, and when the price is right.
As investors, we have to know our circle of competence. This will be a topic we explore at length in an upcoming episode of Compound Money Quietly.
🔨 CMQ Tool: Our checklist for identifying bad businesses.
Bringing everything together
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If the CMQ content is what I believe it is—based on what you tell me—then we can hopefully do some good by establishing a presence there.
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